Development of the breast at the time of thelarche and during pregnancy and lactation is under endocrine, paracrine and autocrine control. Differentiation of the lobuloalveolar structure requires interaction between epithelium and connective tissue stroma. To study the complex interactions between these cell types, we sought to develop a simplified model system consisting of cultures of normal mouse mammary gland epithelium and 3T3 and 3T3-L1 preadipocytes. We observed: 1) exposure to conditioned media from normal mouse mammary gland inhibits proliferation of the same kind of cells, suggestive of the presence of a "mammastatin" as recently reported in the human; 2) conditioned media from 3T3 or 3T3-L1 cells stimulate proliferation and triglyceride accumulation by 3T3-L1 cells, a positive autocrine effect; 3) culture of normal mouse mammary gland in an insert separated by a membrane from an underlying layer of 3T3-L1 cells stimulates growth of mammary epithelium; 4) a factor secreted by normal mouse mammary gland strongly inhibits differentiation of preadipocytes into adipocytes. This is shown by inhibition of triglyceride accumulation when 3T3-L1 preadipocytes were co-cultured with mammary epithelium, when they are exposed to the media from normal mouse mammary gland through inserts in the tissue culture dishes, or by exposure to conditioned media derived from the mammary epithelial cells. A dose response curve is obtained. Activity is retained by passage through a filter with 30 kDa cutoff, and is lost with heating, consistent with a protein factor. This activity may be attributable to one or more known growth factors or it may represent a new protein factor. We are also examining the effects of sex steroids on the proliferation and differentiation of preadipocytes. Preliminary results indicate that progesterone stimulates differentiation and triglyceride accumulation. Studies are underway to evaluate whether this effect is mediated by the progesterone or by the glucocorticoid receptor; 5) differentiation of the preadipocytes is accompanied by marked stimulation of the rate of synthesis and release of a large chondroitin sulfate proteoglycan with approximate molecular weight of 970,000 with a core protein of 370,000 molecular weight with 12 carbohydrate side chains of approximately 48,000 molecular weight. This protein appears to be closely related to versican. This system for study of proteoglycan synthesis and secretion is unusually sensitive to hormonal stimulation with glucocorticoids and inhibitors of cAMP phosphodiesterase.